Southern California Home Sales Drop to Three Year Low

Southern California home sales dropped to their lowest level in three years in October, according to DataQuick.

A total of 16,744 new and resale homes sold in six Southland counties last month, down 7.4 percent from September and 24.3 percent from a year ago.

The median price paid for a Southland home was $283,000 last month, down 4.2 percent from $295,500 in September, but up 1.1 percent from $280,000 a year ago.

“In addition to a lousy economy, the housing market still has a couple of nasty bottlenecks it has to contend with. First, sales of newly-built homes are at a low, mostly because builders can’t build at a low enough price to compete with the inventory of resale homes, many of which are short sales or foreclosures,” said John Walsh, MDA DataQuick president, in a statement.

“Also, lenders still haven’t opened the mortgage money spigot for buying move-up and prestige properties. These properties have come down in value by about half as much as entry-level homes. But trying to finance a higher-end purchase can be a real grind, even for well-qualified buyers with a 20 percent down payment,” he added.

Foreclosure resales accounted for 34.7 percent of resales, up from a revised 33.6 percent in September, but down from 40.4 percent a year ago.

And fixed mortgages continue to dominate, as adjustable-rate mortgages were used for just 5.4 percent of purchases last month, down from 5.5 percent a month earlier, but up from 4.0 percent in October 2009.

Jumbo loans, mortgages above the old conforming loan limit of $417,000, accounted for 17.7 percent of last month’s purchase lending, down from 18.1 in September, but up from 15.5 percent in October 2009.

Before the mortgage crisis, jumbo loans accounted for a whopping 40 percent of the market.

The typical monthly mortgage payment that Southland homebuyers committed themselves to paying was $1,111 last month, down from $1,177 last month and $1,196 a year ago.

Not good news for the flagging housing market…might be smart to wait out that purchase, even if mortgage rates do creep up some…